A firm stocks a certain item, which is managed on a continuous review basis. Demand averages...
A firm stocks a certain item, which is managed on a continuous review basis. Demand averages 230 units per day with a standard deviation of 45 units per day. Lead time is fixed at 10 day.
If the firm sets the reorder point to 2400 units, the cycle-service level will be approximately?? (round down Z to 2 decimal places, and use normal distbn table).
ROP = (Avg. Daily Demand rate * lead time) + safety stock
Safety stock = Z * std.dev. of demand * Sq Root of lead time (consult normal distribution table)
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